Toll road operator admits heading in wrong direction

Matt O'sullivan

BRISCONNECTIONS has entered into emergency talks with its bankers after the operator of Brisbane's $4.8 billion Airport Link toll road conceded that its debts may exceed the value of its assets.

In a day of high drama, the BrisConnections board decided late on Monday to enter into ''formal negotiations'' with its lenders about ''potential reconstruction options''.

The company admitted that ''on present traffic levels and operating costs, the enterprise value [of BrisConnections] may be less than the outstanding debt''.

It has also sought an indefinite suspension of trading of its securities on the ASX.

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BrisConnections appears set to follow a path similar to that of the failed operators of toll roads in Sydney, such as the Lane Cove and Cross City tunnels, and Brisbane's Clem7 tunnel.

''It certainly doesn't look encouraging,'' Andrew Chambers, a research analyst for fund manager Legg Mason, said. ''It is going to struggle to manage its debt load. It looks like their reserves will not last long enough to get revenues up to support the debt.''

Two directors - Andrea Harcourt and Richard Wharton - resigned without explanation, less than half an hour before BrisConnections was placed in a trading halt pending the release of details about talks with its 10 bankers, including European heavyweights Deutsche Bank, BNP Paribas and Societe Generale.

Traffic on the 6.7-kilometre toll road that connects Brisbane Airport to the central city is half what Brisconnections was projecting it to be - even without full tolls in place.

BrisConnections this month appointed corporate paramedics PPB Advisory to review its toll-road business and look at ''current and anticipated traffic volumes, revenue, costs, forecast liquidity and BrisConnections' capital structure''.

The departure of Ms Harcourt comes less than two years after she joined the board. Mr Wharton, a former head of Queensland's Main Roads Department, had been a director since 2008. Neither could be reached for comment on Monday, while BrisConnections' chairman, Trevor Rowe, did not return calls after the board meeting.

Mr Chambers said the most likely option would be for Airport Link to be put up for sale, although this would result in equity-holders being left with nothing and debt holders having to take a haircut.

The lenders were unlikely to agree to a debt for equity swap, he said.

Macquarie Group owns 45 per cent of the units in BrisConnections, Deutsche Bank 33 per cent and the state government's Queensland Investment Corporation 8.28 per cent. The units closed at 40¢ on Friday, down from 65.5¢ at the start of the month.

BrisConnections, through its traffic forecaster Arup, had predicted the Airport Link would attract about 135,000 vehicles a day just a month after it opened, rising to 291,000 vehicles in 2026.

But its latest figures show daily traffic volumes totalled just 66,000 vehicles in October.